Pennsylvania HOUSE Health Council TESTIMONY
David McKalip, M.D.
Chairman, Council on Medical Economics, Florida Medical Association
President, Florida Neurosurgical Society
Chairperson, Florida Taxpayers Union
“Any society that would give up a little liberty to gain a little security will deserve neither and lose both.” — Benjamin Franklin
“Was the government to prescribe to us our medicine and diet, our bodies would be in such keeping as our souls are now.” —Thomas Jefferson: Notes on the State of Virginia, Query XVII, 1782.
Thank you for bringing me to testify before the Pennsylvania House Health Care Policy Task Force. I am a private practice neurosurgeon from Florida and for over ten years, I have practiced in academics, small group and solo settings taking care of patients from all walks of life. While in my first practice at San Francisco General Hospital, I saw the many shortcomings of a government run hospital. Even with dedicated professional health care staff, the constant budget shortfalls, debt and politically motivated regulatory burdens drained the hospital there. Patients waited weeks to go to rehabilitation units while patients in private systems went in days. Repeat patients never took responsibility for their own health — always assuming that the public system would be there for them. I went to San Francisco a young liberal and left two years later a disillusioned doctor. After about two years in private practice I began to realize that only the private sector could deliver high quality affordable health care in the most fair and equitable way without rationing. That is not to say that the current structure of private health care is perfect — it is encumbered by a complex and odd system of financing that few economists would design: third party financing of first dollar coverage. Nevertheless, the care patients receive through private health insurance is far better than that received by those with government funded health care. Better than private or public third party payment is the results produced when patients spend their own money from a health savings account backed by a catastrophic health plan. (But I will discuss that more later).
I saw Medicaid patients for seven years by choice even though Medicaid in Florida pays only 56% of Medicare rates and each patient entering my practice was the equivalent of me writing them a check. I couldn’t blame other neurosurgeons who were not taking these patients and I saw patients drive hours to see me. Finally I opted to see Medicaid only for hospital emergencies — not in my office.
Another publicly run health system also has neglected some of our most valued citizens: The Veterans Administration. Layers of stifling bureaucracy and limited resources have lead to long waits for advanced medical care. At multiple V.A.’s I saw Veterans wait months for a spine surgeon while living with crippling pain or slowly evolving paralysis, get put on another waiting list for surgery and have their surgery cancelled at the last minute simply because there wasn’t enough staff to keep working after 3 pm or any interest of the employed physician staff to work harder.
I have seen Medicare patients denied advanced spinal surgical techniques or subject to overnight stays when others go home the same day due to arcane rules. I have had to perform two surgeries on Parkinson’s patients for dual brain stimulator pacemakers since Medicare won’t pay for the single pacemaker at the same price! I have seen how Medicare patients wait over an hour to see a Nurse Practitioner for 10 minutes and their doctors for 3 minutes and leave confused only to enter the mill again. I have seen referrals to specialists from Nurse Practitioners that a primary care physician could have avoided. But the number of primary care doctors has dropped as Medicare has artificially controlled the amount of payment for their services. I also routinely see able-bodied patients inappropriately granted disability for health care and disability benefits.
What I have seen is the slow death of the medical profession. Unfortunately, the final nails in the coffin are coming as even more arcane rules, price controls and political meddling are envisioned by governments all over the nation. Now I hear that Pennsylvania wants to enter into one of the most dangerous systems of health care financing ever devised: A single payer system.
Many utopian dreamers are motivated by the best of intentions and envision that the best way to achieve high quality health care is to create a system by which the government will control all health care spending and ensure that it is equitable, efficient and proper. They are basing their approach on an economic philosophy that has failed many times in history — one of collectivism and central economic planning. Many of those advocating such a system believe that if an elite group of all knowing and benevolent planners control spending, that nothing but good will result. Unfortunately this had never been the case as evidenced by the fall of the Berlin Wall, the lack of property and individual rights in societies under dictators, and recent examples of failing government-run school systems in America with a never-ending supply of money.
Those advocating single payer systems don’t understand that what made America great was not centrally planned economies. Success in America came from free markets where individuals owned their own property and are supported by a rule of law to privately negotiate terms of payment and exchange with willing producers. Those pushing single payer financing mistakenly label the system of private health insurance as a free market when it is in fact an overregulated cartel that relies on political connections to protect its profits. The sad truth is that the American health economy has not had a truly free market for decades since patients don’t pay for routine annual health care. And now, when control of health care financing by third parties has lead to runaway medical inflation and rampant dissatisfaction among patients — an expansion of third party control of health care financing is proposed. But this third party would be the State and the State would be forced to finance health services amid shrinking budgets and increasing demands. All while avoiding rationing and interference in the patient-physician relationship. History shows us that this is impossible.
In fact, as I have fought for tax reform in Florida, I have come to discover that the root of most of our budgetary shortfalls in government and even in private industry are unrealistic promises for health care and retirement benefits ultimately funded by the taxpayer. Whether through direct funding of government workers or by supporting private corporations and union members through bailouts — it is the unfunded “legacy costs” that are crippling our country. So it makes no sense that we should expand the burden of taxpayers and the dangers to patients by completely turning over to government the reins of health care financing and ultimately, health care decisions.
Single payer health systems produce consistent results: rationing, waiting lines, better treatment for the well connected, escalating and unsustainable public expense, cookbook medicine and less patient satisfaction. Sadly, the vision for health system reform in D.C. will lead to the same outcomes because they seek to create a command and control structure over medical practice and payment decisions and to further expand third party payment for health care financing.
Many myths are commonly used to support a single payer system are well enumerated in the 2004 Book by John Goodman and Devron Herrick “Lives at Risk” (a summary of their findings is available at the Cato Institute.) One popular myth is that there is a “right to health care”. But in Canada the Supreme Court recently overturned the ban on private insurance stating that “access to a waiting list is not access to health care.” The U.S. Supreme Court has ruled that the Social Security program doesn’t provide a guaranteed right to its retirement benefits; similar denial of Medicare rights is certainly justified since it is part of the Social Security Act.[1]
Some say quality is higher in socialized systems but technology and doctor time is limited and cancer survival rates are lower. Claims of lower infant mortality rates ignore that calculations in other countries don’t include very low birth weight infants Americans try to save or babies that die within 24 hours after birth. Some believe that health care is made available on the basis of need instead of ability to pay when in fact the wealthy and well connected routinely “jump the queue” to get care. In England and France, it is the very existence of a private health care system next to the public system that allows many to receive care — after paying taxes for the care of others too. Many say we get half the recommended health care compared to other countries. In fact, such conclusions are based on pseudoscience. For instance, a democratic process is used to determine what is “recommended care”, rather than science and for these studies, nurses performed hasty chart reviews of substandard records to look at a small number of patients for each care process.
Among the worst myths is that countries with single payer system hold down costs by avoiding administrative expenses. The fact is that these countries hold down costs by rationing. In Britain, the life saving breast cancer drug Herceptin is denied patients on the cold calculation that it is more expensive than the government approved $45,000 per “quality Adjusted Life Year.” At one point, elderly patients there were required to go blind in one eye before receiving treatment for a visual disorder in the other (macular degeneration). There is also the soft rationing of people dying as they wait for heart surgery or for MRI’s for their brain tumors. Further, most European countries with socialized medical systems have very limited defense budgets since they rely on the United States (see Of Paradise and Power, Robert Kagan, Knopf Publishers, 2003). Finally a close examination of the administrative cost myths reveals that government administrative costs are higher when one considers the costs of tax collection and enforcement, legacy costs of government workers, costs to citizens and society in productive time lost for delayed or denied care. In this nation there are now illness priority lists for health care spending in Oregon and nationally.
Many myths about American health care are being used to push greater public funding and greater third party control of health care. For instance, many claim that medical bankruptcy is common when it accounts for less than 5% of bankruptcies. Many believe that the uninsured use emergency rooms more while only 17 percent of ER visits are from uninsured patients. Insured Medicaid patients are far more frequent users of the E.R. than the uninsured.
Many claim that there are 46 million uninsured Americans when 9.7 million are not Americans, 16 million make more than $50,000, and 14 million are eligible for government programs leaving 8 million as chronically uninsured. The rate of uninsured in the U.S. is steady at about 15-16% since the early 90’s. In Pennsylvania, about 92% are insured!
You are encouraged to closely analyze the insurance data from Pennsylvania. I have come to discover that Pennsylvania ranks 7th highest for number of insured patients and of the approximately 1.02 million uninsured in 2008, 53% were so for less than one year. Since 2002 there are about 100,000 fewer uninsured in Pennsylvania (Bureau of Labor and Statistics). Of those, 537,000 were eligible for government programs and 359,000 had incomes > $50,000. 91,000 were short term uninsured and that left only about 1.09% as long term uninsured (about 132,000 people). (References submitted with testimony). 58% state that the cost of insurance is the most important reason for being uninsured. Common causes of high insurance costs are laws that prevent purchase of insurance across state lines, or that require guaranteed issue or community rating of insurance rates. Under Guaranteed issue the sick can purchase insurance after they are sick and through community rating, the young and/or healthy face higher insurance costs to subsidize lower premiums for older and/or sicker patients. This drives the young away from insurance when they should have it for catastrophic care (further increasing the burden on public rolls if they become severely ill or injured). State mandate of insurance benefits is another common cause of increased cost. Many states require coverage not wanted by all such as chiropractic care, acupuncture or hair prosthesis — all with their own special interest lobby. Pennsylvania seems to have resisted this to a greater extent, but that will end under a single payer system.
Unfortunately, in Pennsylvania, the cost to an individual to purchase health insurance outside or the tax-advantaged workplace is the 5th highest in the nation. Those purchasing through small groups however see rates that are 29th in the nation. Some of the cause for the lower cost in the small group market may be the growth of Health Savings Accounts and High Deductible Health Plans (HSA/HDHP) which are now estimated at 20% across the nation. When small group plan members are offered a choice between traditional insurance and an HSA/HDHP model, 42% choose the later. Unfortunately, Pennsylvania appears to have about only 1.6% enrolled in these plans overall.
The State is to be commended for low rates of uninsured, but providing universal coverage should not be your goal. The goal should be to provide universal access to affordable health financing products that people need and desire. The HSA/HDHP model is an attractive means to meet this goal. Under this model, patients place funds into a tax-free health savings account to pay for the first $1,100 -$2,200 of their health care themselves (or more). This allows them to shop for higher quality and lower cost insurance and medical care and still be 100% covered when they have catastrophic problems above their HSA level. HSA/HDHP enrollees are more likely to participate in health and wellness programs and have higher success rates in smoking cessation, diet, fitness and overall health. 27% of new HSS/HDHP enrollees are previously uninsured, use the Emergency room 32% less and have premiums that are 15-20% lower. 84% of plans have first dollar coverage for preventative care and 45-49% of these enrollees have chronic conditions (negating the myths that such patients couldn’t receive care with such coverage). 40% have incomes less than $60,000.
As you see, free markets characterized by competition and choice provide the lowest costs services at the highest level of quality. There will always be a role for a government safety net. But if the government becomes the means for covering all your citizens, there will be an overall lowering of the quality or care for all citizens and endless politicization of health care. Also, you will not be able to afford coverage for those who are truly poor.
You are cautioned to avoid current financing gimmicks under examination in Massachusetts such as an individual insurance mandate where public costs are running out of control, rationing boards are being created, and primary care doctors are hard to find — even as about 3% of their citizens remain uninsured while facing tax penalties. Also to be avoided are command and control structures such as pay for performance, public reporting of physician data, mandated electronic medical records and creation of health boards that create “best practices.” These have been shown to have many unintended consequences such as avoidance of high risk patients, increased negative impact on minorities and lower income populations, gaming of the system to achieve higher scores, increase in inappropriate medical practices in some patients to achieve an overall higher score, and a failure to actually improve outcomes for patients. I would strongly encourage you to closely evaluate such programs prior to expansion (independent evaluation of Pay for Performance by this presenter included with reference material). I also strongly encourage you to set up strict reporting requirement for any government created program to see if any actual benefit has occurred using independent, unbiased consultants with reliable source data. It is also important to create a means for citizens to record complaints with any new government created health program designed to lower costs. Episodes of waiting, rationing, denied care, delayed care, patient dissatisfaction and the like should be recorded and reported publicly. Full judicial review rights for patients and their doctors should be allowed to ensure that their constitutional rights are not trampled in any system created or managed by the government.
Finally, as you consider further increasing the role of government in health care, you should consider whether your state budget can realistically handle it. This is especially true considering the increasing burdens on the Federal government and the decreasing likelihood they could provide rescue funding as you have budget shortfalls (as they are now doing in Massachusetts).
Pennsylvania is the cradle of our country’s constitutional framework to protect individual liberty from intrusive government control. It should not be the place where individual liberty in health care is lost as a precedent for the entire nation. Please remember the importance and power of the free market as you continue your deliberations and its proven superiority at decreasing costs and increasing equity and access and quality.
“Any society that would give up a little liberty to gain a little security will deserve neither and lose both.” — Benjamin Franklin
[1] Fleming v. Nestor (1960). Justice Harlan states for the Majority “To engraft upon the Social Security System a concept of ‘accrued property rights’ would deprive it of the flexibility and boldness in adjustment to the ever-changing conditions it demands.”
Dr. McKalip is a Solo Practice Neurosurgeon in St. Petersburg Florida and President of the Florida Neurosurgical Society.
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